Consumer Advocates Demand Removal of Earthquake Chief

SANTA MONICA -- Insurance consumer advocates decried the December appointment of David Knowles as head of the California Earthquake Authority and asked State Treasurer Phil Angelides and Governor Davis to remove him from his post, in a letter sent today. Knowles, who received over $119,000 in insurance industry contributions as a California Assemblyman, was appointed to the post by outgoing Governor Wilson and Treasurer Matt Fong and Insurance Commissioner Chuck Quackenbush in the final days of the Wilson administration.

"This appointment was made in the last days of anti-consumer administrations in the Governor's and Treasurer's offices without a proper job search," the letter states. "A longtime insurance industry advocate like Mr. Knowles must not be allowed to steer the C.E.A. or earthquake policyholders will pay the price and the insurance industry will reap tens of millions of dollars in profits."

The two-page letter details FTCR's concerns with the appointment of Knowles. The advocates suggest that the C.E.A. under Knowles might, for example, raise earthquake premiums to artificially protect private insurers from any liability in the case of a catastrophic quake. In exchange for legislation, authored by then Assemblyman Knowles, which relieved insurance companies of virtually all responsibility to include earthquake coverage as a part of homeowners insurance, private insurers agreed to serve as a safety net after a major disaster.

Knowles will be paid $160,000 per year under the four year contract he has signed. The Governor and the Treasurer, as members of the Governing Board of the C.E.A. along with Insurance Commissioner Quackenbush, have the option to terminate the contract at a buyout cost of $160,000. FTCR asks that the Governing Board conducts a proper job search to fill the post.

"Mr. Knowles should be fired, and, as a fiscal conservative, he certainly should not take any golden parachute compensation for time he has not worked," the letter concludes.